Famous Footwear 2013 Annual Report Download - page 22

20 2013 BROWN SHOE COMPANY, INC. FORM 10-K
without substantial interruption, expense, delay, or other operational or financial problems, which may adversely aect our
financial condition and results of operations.
Our business, results of operations, financial condition, and cash flows could be adversely aected by the failure of financial
institutions to fulfill their commitments under our Credit Agreement.
Our Third Amended and Restated Credit Agreement (the “Credit Agreement”), which matures on January 7, 2016, is
provided by a syndicate of financial institutions, with each institution agreeing severally (and not jointly) to make revolving
credit loans to us in an aggregate amount of up to $530.0 million in accordance with the terms of the Credit Agreement.
In addition, the Credit Agreement provides for up to an additional $150.0 million of optional availability pursuant to a
provision commonly referred to as an “accordion feature.” If one or more of the financial institutions participating in the
senior secured revolving credit facility were to default on its obligation to fund its commitment, the portion of the facility
provided by such defaulting financial institution might not be available to us.
If we are unable to maintain our credit rating, our ability to access capital and interest rates may be negatively impacted.
The credit rating agencies periodically review our capital structure and the quality and stability of our earnings. Any
negative ratings actions could constrain the capital available to our company or our industry and could limit our
access to long-term funding or cause such access to be available at a higher borrowing cost for our operations. We
are dependent upon our ability to access capital at rates and on terms we determine to be attractive. If our ability to
access capital becomes constrained, our interest expense will likely increase, which could adversely aect our financial
condition and results of operations.
We are subject to periodic litigation and other regulatory proceedings, which could result in the unexpected expenditure
of time and resources.
We are a defendant from time to time in lawsuits and regulatory actions (including environmental matters) relating to
our business and to our past operations. Due to the inherent uncertainties of litigation and regulatory proceedings, we
cannot accurately predict the ultimate outcome of any such proceedings. An unfavorable outcome could have a material
adverse impact on our business, financial condition, and results of operations. In addition, regardless of the outcome of
any litigation or regulatory proceedings, such proceedings are expensive and will require that we devote substantial
resources and executive time to defend, thereby diverting management’s attention and resources that are needed to
successfully run our business. See Item 3, Legal Proceedings, for further discussion of pending matters.
Rising insurance costs could adversely aect our results of operations, financial condition, and cash flows.
We self-insure a significant portion of our expected losses under our workers’ compensation, employment practices,
health, disability, cyber risk, general liability, automobile, and property programs, among others. The liabilities
associated with the risks that are retained by us are estimated by considering our historical claims experience and
data from actuarial sources. The estimated accruals for these liabilities could be aected if claims dier from the
assumptions used and historical trends. Unanticipated changes in the estimates underlying our reserves for these
losses, such as claims experience, inflation, and regulatory changes, could have a material adverse eect on our
financial condition and results of operations.
Comprehensive health care reform legislation provisions have become eective which, among other things, includes
guaranteed coverage requirements, eliminates pre-existing condition exclusions, and annual lifetime maximum limits,
restricts the extent to which policies can be rescinded, and imposes new and significant taxes on health insurers and
health care benefits. Possible adverse eects of the health reform legislation include increased costs, exposure to
expanded liability, and requirements for us to revise ways in which we conduct business.
We are subject to the SEC’s “conflict minerals” disclosure obligations.
The Company is subject to recently adopted SEC disclosure obligations relating to its use of tantalum, tin, tungsten, and
gold (commonly referred to as conflict minerals) sourced from the Democratic Republic of Congo and adjoining countries.
Some of these conflict minerals are present in our products. The disclosure obligations are complex, and there is little
formal guidance with respect to their application. The first reports under the disclosure obligations are required to be filed
with the SEC no later than June 2, 2014 relating to the Company’s activities during 2013. Although we expect to be able
to file the required reports on time, in preparing to do so, we are dependent upon the implementation of new systems
and processes and information supplied by our suppliers of products that contain, or potentially contain, conflict minerals.
To the extent that the information that we receive from our suppliers is inaccurate or inadequate or our processes in
obtaining that information do not fulfill the SEC’s requirements, we could face both reputational and SEC enforcement
risks as well as significant costs related to the compliance process.
ITEM 1B UNRESOLVED STAFF COMMENTS
There are no unresolved written comments that were received from the SEC sta 180 days or more before the end of
our fiscal year relating to our periodic or current reports under the Securities Exchange Act of 1934, as amended.